Macmillan Settles E-book Price Suit with DoJ

by Jim Milliot
|

Feb 08, 2013

With its larger publisher competitors already having settled with the Department of Justice, Macmillan said Friday morning that it too has reached an agreement that will end the government’s lawsuit over its e-book pricing policy.

In a letter to authors, illustrators and agents Macmillan CEO John Sargent said he agreed to settle “because the potential penalties became too high to risk even the possibility of an unfavorable outcome.” He noted that two major developments contributed to his change of heart: the Random House-Penguin merger under which the combined Penguin Random House would sell its e-books under terms Penguin reached with the DoJ; and the fact that as the last remaining publisher holdout, Macmillan faced the possibility of being responsible for not only its own treble damages but for those of the other publishers as well. The amount of damages Macmillan could have been on the hook for, Sargent said, “was much more than the entire equity of our company.” He also noted that with Penguin Random House selling e-books under new terms “Macmillan’s stand-alone selling at full agency price would have no impact on the overall marketplace. And in addition, your books and our business would have a pricing disadvantage for two years. “

Sargent said he expects the change in Macmillan terms “to take effect quickly" and in the filing with the court the agreement calls for Macmillan to contact its e-book retailers within three days after the entry of the final judgment to end any existing agreements and to terminate any most favored nation clauses. Macmillan has agreed to supply to the DoJ by February 15 a copy of any agreement reached with e-book retailers on or after January 1, 2012. According to the documents, beginning on December 18, 2014, Macmillan will be once again free to negotiate new e-book deals with e-book retailers.

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